“We love paying taxes”, said no one ever. “The price of living in a free society,” say many. However, some taxes are worse than others, and one largely unknown and clandestine tax has achieved Adam’s dubious distinction of “most despised.” IRMAA (“Erma,” we call her in jest) is Social Security’s method of charging an income tax on recipients of monthly Retirement Benefits who, in the opinion of the Agency, apparently have “higher-than-needed” incomes.

It is bad enough that taxation of Social Security benefits is already skewed by income. Benefits are either not taxed at all (for lowest income Americans), or half taxable (for mid-range incomes), or 85% taxable for higher income people. This is a significant disparity already, but IRMAA makes the matter even worse.

According to the Social Security Administration, the government pays 100% of Medicare “A” (hospital charges) for almost all Americans. They also subsidize about 75% of Medicare “B” (doctors, etc.) premiums for 90%+ of enrollees. The others (7% to 10%) are charged a higher percentage of actual Part “B” costs, simply because they have higher incomes and are therefore assumed to be able to cover more of their own medical expenses.

For 2025, the base monthly cost of Medicare “B” is $185.00 per enrollee, and for optional Medicare “D” prescription drug plan, $36.78. For Medicare enrollees who are also collecting Social Security monthly retirement benefits, Medicare premiums (plus IRMAA charges when applicable) are deducted from monthly benefit payments. Out of sight, out of mind, unfortunately.

Everyone should have an online Social Security account, regardless of their age. It is incumbent on every individual to verify their own earnings record at Social Security, as that will determine their Primary Insurance Amount (PIA). Errors along the way may be difficult to correct later.

The biggest problem is that the application of IRMAA surcharges is based on the recipient’s income from 2 years earlier. This is due to the lag between earning money and filing Personal Tax Returns on those earnings. By the time IRMAA charges are determined, the recipient’s circumstances may have changed dramatically. For enrollees whose income has fallen recently due to changes such as retirement, there is a procedure to reduce or eliminate IRMAA charges.

Social Security has a Form called SA-44, Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event, which is used to request a reduction or elimination of IRMAA charges. Qualifying events include Marriage or Divorce, Death of a Spouse, Work Reduction or Stoppage, Loss of Income-Producing Property, Loss of Pension Income, and/or Employer Settlement Payment. For Medicare enrollees who incur a qualified event and reduced annual income, use the SA-44 process to adjust your dreaded tax (even retroactively to January or the actual date of the event).